LONDON: UK lawmakers on Wednesday called for cryptocurrency investment in the UK to be regulated in the same way as the gambling industry. The request was made by the influential cross-party Treasury Committee, just a day after EU ministers agreed on tougher tax regulations for cryptocurrency transactions. There are growing concerns about the lack of oversight in the cryptocurrency sector around the world, especially regarding popular units like Bitcoin and Ether.
According to a report by the Treasury Committee, “Unbacked crypto-assets have no intrinsic value, and their price fluctuations expose users to the potential for substantial gains or losses while serving no useful social purpose.” ” The committee further highlighted that the characteristics of crypto-assets are similar to gambling rather than financial services, based on the evidence they collected on consumer behavior. Consequently, they strongly recommend that the government classify retail trading and investment activities involving unbacked crypto-assets as gambling rather than financial services.
The global cryptocurrency market, which experienced a surge in demand from individual investors during the Covid lockdown, reached an all-time high of around $3.0 trillion at the end of 2021. However, it has since declined significantly and is currently valued at over $1.1 trillion. The industry, which aims to gain acceptance from traditional finance, has been rocked by various scandals, including the collapse of cryptocurrency Terra in mid-2022 and the failure of exchange FTX later that year.
The Treasury Committee raised concerns about poorly managed businesses in the sector, as well as the growing use of crypto by fraudsters and other criminals. The conservative government led by Prime Minister Rishi Singh is keen to establish a regulatory framework for crypto to avoid falling behind the EU and the US. The committee’s report emphasized that the role of government should not be to promote technological innovation for its own benefit.
While the committee criticized the UK’s failed plan to sell crypto-technology-based non-fungible tokens (NFTs), it praised the UK’s proposals for greater regulation of professional crypto investors. Additionally, the committee recognized the potential of cryptocurrencies to increase efficiency and reduce transaction costs.
In a parallel development, the European Union has taken further measures to protect investors. EU finance ministers agreed on Tuesday to implement rules targeting people who keep their wealth in unregulated places. Last month, the European Union Parliament approved the world’s first comprehensive rules for crypto-assets.
